An industry report released in May documented the Q1 2016 state of the Cape Town and Johannesburg commercial property markets. In the Cape, over 18 000m2 of office space was taken up in the period, reflecting stable demand and a vacancy rate of 7.2% carried over from Q4 2015. Retail space saw a decline in vacancies, due to a boost in retail sales in the economy. This momentum, however, depends on how long consumers can continue to support retail growth. Given the recent hike in inflation and interest rates, businesses have opted for a cautiously optimistic approach.
A separate analysis of the national industrial market found that the country is in the midst of sustained demand for industrial real estate. The decline of the primary sectors and hard manufacturing has been accompanied by a significant increase in consumer goods imports, resulting in the rapid upgrading of storage, logistics, and warehouse space (totalling some 11.9 million square metres over the past decade). Committed reinvestment in ports, railways and roads has become apparent, owing also to the industrialisation of previously underserviced provinces.
The Eastern Cape, Northern Cape, North West, Mpumalanga, and Limpopo markets have all had double-digit growth in light industrial premises over the past ten years, highlighting the elevated logistics activity countrywide. The storage and distribution sector currently accounts for 9% of national GDP.
Cape Town Central City surges
The Cape Town Central City Improvement District (CCID), through its annual report, enables investors and industry to track the drivers of transformation in the Central City area. Since 2012, the CBD and Foreshore have experienced unprecedented modernisation and urban renewal. Most notable is the meteoric growth of combined business and leisure, as well as the distinct geographical nodes in the Central City.
To support the legal, creative, financial, healthcare, and publishing sectors – fundamental to the CBD’s economy – landmark developments were initiated in 2012 and include the Portside, Touchstone House, 22 Bree St, the Civic Centre upgrade, and the CTICC expansion. Then, the CCID recorded an investment value of around R3.2 billion.
From 2012 onwards, investments have included Roggebaai Place, 33 Heerengracht, the Media24 upgrade, The Towers redevelopment, the KPMG building, the redevelopment of Triangle House, and the full upgrade of the Artscape complex and the Southern Sun Waterfront. These projects have boosted the investment value of the Central City by reportedly R4.6 billion. Added, are the V&A Waterfront’s latest developments (which are expanding towards the Foreshore with the future possibility of once more connecting the CBD to the sea), and the night-time and entertainment economies catering to the growing CBD residential and professional population.
Bree Street is the best example of these new nodes fusing business and leisure, and is rapidly evolving to become the CBD’s first 24-hour economy – retail and professional business during daytime, with popular after-work venues, eateries, and late-night bars in the evenings. The Central City Improvement District has recorded shops and restaurants opening along Bree street at the rate of one a month over the past year, with the flurry in activity and commercial interest spreading to surrounding streets. So far this year, there have been seven confirmed developments or redevelopments already (three with a combined value of R270 million), underscoring the rapid makeover happening in the Cape Town CBD and Foreshore for the foreseeable future.
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